Buy Zensar Tech Ltd for Target Rs.1,000 by Choice Institutional Equities
AI-driven TCV reaches 28%; EBITDAM to Stay Within Mid-Teens:
ZENT's deal momentum is increasingly driven by AI, contributing 28% to TCV, up from 21% in Q1FY26. TMT vertical de-grew by 10.2% in CC terms, with clients shifting investment from Opex to Capex for GPUs and data centres. However, we believe, going ahead, de-growth in TMT is expected to bottom out. Moreover, the company’s strategy is to grow other verticals faster so as to reduce TMT exposure. The company is also deeply committed to deliver mid-teens EBITDA margin on a consistent basis despite investing in sales, capabilities and platforms.
View & Valuation: ZENT’s H1FY26 performance remained constrained by tariff impact in the TMT and MCS verticals. However, ZENT’s focused services-led growth and AI-led deal wins positions it well relative to peers. We expect Revenue/EBIT/PAT to expand at 9.0%/12.2%/14.7% CAGR over FY25–28E. We maintain BUY rating with a revised Target Price of INR 1,000, based on FY27–28E avg. EPS of INR 40.
For Detailed Report With Disclaimer Visit. https://choicebroking.in/disclaimer
SEBI Registration no.: INZ 000160131
